🇺🇸 US and recession

Together with Flower Turbines 

Good morning investors! We’re back after a long break and nothing much has changed. Investors are still interested in Bitcoin and some biggies are preparing for major jumps.

Today we cover:

• Will the US go into a recession?

• Nvidia set to announce earnings.

• Incomes that are tax free - Part III

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📊 Economy and News 

Will the US go into a recession after Japan, Germany, and the UK?

Now that some of the world’s largest economies are in a recession, everyone’s asking one question – is the US next?

We don’t see it happening.

The US has been doing very well. The country recorded higher than expected GDP growth in the previous quarter, opposite to the likes of Japan and the UK.

But why? There are many reasons.

Firstly, the $5 trillion spent in the name of 'stimulus' seems to have helped the economy. Consumers continued to spend despite inflation, and industries continued to flourish.

Plus, inflation in the US isn’t as bad as it is in some other countries. Gas prices did not shoot up in the country despite the situation in the Middle East. They’re rising now but the situation isn’t alarming (yet). Plus, the US isn’t affected due to the Russia-Ukraine war since it isn’t as dependent on Russia as Europe.

The situation wasn’t always like this and the US had been very close to a recession. However, the risk has been elevated since the US Federal Reserve began its tightening cycle in March 2022.

Fed Chair Jerome Powell told reporters in December that “there’s little basis for thinking that the economy is in a recession now.”

Others like Philipp Carlsson-Szlezak, Boston Consulting Group’s global chief economist, also don’t think the US will enter a recession this year. However, a little risk is still there.

Investors have already taken into account expected rate cuts this year. If this doesn’t happen, it will shock the market. One has to be a little cautious. After all, January wholesale inflation saw its biggest monthly increase since August. Plus, US homebuilding saw its biggest drop since April 2020.

Some of these signs are considered ‘normal’, but as an investor, it’s vital that you keep an eye on them.

Global hits:

• UAW threatens to strike Ford truck plant in Kentucky if local issues aren’t resolved.

• The Middle East and North Africa's gross domestic product is expected to plummet to 1.9% in 2023 from 6% in 2022.

• A ‘mild contraction’ for the Canadian economy in early 2024?

Just in: Israel’s economy slumps 19.4% in the fourth quarter as war takes a toll.

📈 Stocks

S&P 500 5,005.57 (-0.48%)
DJIA 38,627.99 (-0.37%)
NASDAQ 17,685.98 (-0.90%)
BRENT CRUDE 13 (-%)
* Prices as of Feb 19th, 12:20 AM UTC

Nvidia will announce earnings this week

Nvidia is set to report earnings for its fiscal fourth quarter of 2024 on Wednesday, Feb. 21.

It is also our Asset of the Week (every week in the Pro, we cover an asset suggesting whether to buy or sell it so you can make a good profit. For Nvidia, we expect a profit of 7% if you make the right call. Check the Pro out today to know more).

The stock is already up 50.57% YTD and analysts expect Nvidia's revenue could more than triple from the same period a year ago amid a surge in demand for artificial intelligence chips.

All eyes will be on the chipmaker's data center segment, which boosted Nvidia's earnings the previous quarter, and the company’s plans to launch a new custom chip unit.

Also check: New York City sues social media platforms over youth mental health crisis.

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💵 Personal Finance

Incomes that are tax free - Part III

Let’s continue the series and have a look at a few more ‘incomes’ that are not taxed in the US:

Financial Gifts

If you talk to a tax expert, they will tell you this ‘tax secret’.

A financial gift is tax free given that you can prove it is a ‘gift’, i.e.: you did not pay anything in return.

This applies to both the receiver and the giver as the lifetime gift tax exemption is $12.06 million for 2022 and $12.92 million for 2023.

There, however, is a caveat.

You will have to pay income tax if the gift ends up earning you income. For example, if it was a painting that you sold to make a profit or a stock that earned you dividends. You will pay tax on this additional income.

Health Savings Accounts (HSAs)

Health savings accounts offer several benefits, including tax advantages as HSA distributions are not taxable. There’s just one condition: expenses must be medical related.

Inheritances

This is a complicated area because inheritances are generally not taxable. But, there are some exceptions.

You may have to pay taxes if the estates are over a certain size. These taxes, however, are paid by the estate itself.

Exemption for 2022 stood at $12.06 million. For 2023, it is $12.92 million. You will have to pay taxes on the amount that goes above these limits.

💰 Be a Better Investor

👩🏽‍⚖️ Legal Stuff
Nothing in this newsletter is financial advice. Always do your own research and think for yourself.

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